All industry sectors face various challenges, but two sectors, the Chartered Accounting and Legal Sector are unique in their approach to a large degree.
The CA Council has identified a number of existing challenges, based on future outcomes that are desirable for the sector as a whole. The information listed in this article is sourced from the CA Sector Charter Code, version 3.
With the aid of a process of gap analysis, a number of specific activities have been highlighted that are recommended to effect the transition from the current situation to the desired future situation. However, this is not intended to be an exhaustive list of recommended activities. The primary aim is to establish a CA sector structure that reflects the demographics of South Africa, and the secondary one is to enable the sector to comply with the targets set in terms of the B-BBEE Codes of Good Practice.
While many of these activities are already being undertaken by the CA Sector and SAICA, the assumption should not be that all are presently being implemented or that they exhaust all possible courses of action for achieving the goals. The outcomes will be measured in terms of achievement of the targets set in the Codes of Good Practice and specifically the scorecards for the CA and QSE CA sectors. These targets provide objective criteria against which interim advances and successes can be measured to determine to what extent implementation of the activities has contributed towards achieving the final goals. Finally, it serves as a summary and point of departure for restructuring and development of a CA sector that has achieved the vision of growth and empowerment of Black people in the CA profession so that they may meaningfully participate in and sustain economic growth in South Africa.
OWNERSHIP AND MANAGEMENT CONTROL
The desired future outcome that the CA sector would like to achieve by means of the recommended activities is an increase in the percentages of Black people, and particularly Black females and Black designated groups, in the ownership and management of CA entities, as well as an increase in Black CAs in the ownership structure—measured in terms of exercisable voting rights, economic interest, board participation (Black directors), and management positions at all levels.
Current situation/challenges
• Numerous Black professionals are leaving public practice because of the following:
o Public practice firms have to compete with commerce and industry to fill management positions (to comply with their own B-BBEE Sector Codes).
o Commerce and industry offer higher salaries. o Public practice is associated with high risks (also with regard to litigation), which are regarded as undesirable and not commensurate with rewards when compared to other sectors.
o Inadequate career planning for qualified Black staff in firms • Black partners are required to play a disproportionately large role in business development and marketing, which leaves them with little time to focus on technical input and personal development.
SKILLS DEVELOPMENT
The main area in which the CA profession can contribute to skills development is by bringing about an improvement in the number of Black people who become CA professionals. Therefore, efforts for skills development will be concentrated on increasing the number of Black people, and especially Black females, in the CA field. The CA profession has long realised that skills development can only be achieved if Black people, and particularly Black youth, receive the necessary basic level education to enable them to become CA professionals. Their education must be based on a solid grounding from school level upwards in the subjects related to the accounting and auditing fields. Therefore, activities to bring about equity must start at the school level.
Apart from the formal qualifications required for becoming a CA(SA), prospective CA(SA)s have to serve under a formal training contract. Therefore, in-service training is regarded as a component of skills development here. To achieve the targets set out in the scorecards, activities for achievement of skills development have been broken down into a number of different components:
- Secondary education level
The aim is to create a pipeline of possible candidates for employment in the CA sector by contributing to the education of secondary school learners who would be eligible to enter tertiary education institutions in the field of accountancy and auditing. The target at this level is thus to increase the percentage of Black learners who enter undergraduate programmes in the accountancy field.
Current situation/challenges
• A lack of career awareness, coupled with inadequate subject choice guidance, with the result that o insufficient Black learners know about accountancy and related positions in the profession o not enough learners and educators are aware of the importance of mathematics for career purposes.
o Insufficient mathematics educators are available to teach this subject. o Learners do not have appropriate numeracy and English literacy skills upon entering higher education institutions.
• Uneven standard of education, so learners are not sufficiently prepared for the rigours of tertiary-level education or working in the public practice environment.
- Tertiary education level
With regard to the tertiary education level, the first outcome that is desired is a significant increase in the number of Black students who enrol for undergraduate and postgraduate programmes in the accountancy field. However, the success of the intervention will be measured by the number of these students who pass and achieve degrees at both levels. To further this goal, mentoring and assistance will be offered to Black students at tertiary education institutions.
Current situation/challenges
• Poor throughput pass percentages at undergraduate and postgraduate levels amongst Black students.
o Financial pressure and other related factors increase the dropout level.
o A lack of funding leads to many Black students studying on a part-time basis, which in turn means that they take longer to obtain a tertiary qualification or may not obtain such a qualification at all. o Lack of an effective learning model – many students work hard, but not effectively. o Lack of mentoring and monitoring of students contributes to a high dropout level and poor throughput pass percentages.
o Students have a lack of exposure to business skills. o A focus primarily on technical skills, which leaves students unprepared for other skills in their business lives.
• Historically disadvantaged universities are still unable to achieve accreditation.
- Qualifying Examination level
This is the final formal education level that candidates have to pass before they become CAs and RAs. The desired outcome is a dramatic increase in the numbers of Black candidates who take and pass both parts of the QE (Initial Test of Competence (ITC) and the Assessment of Professional Competence (APC)).
Current situation/challenges
• Poor pass percentages achieved by Black entrants in the QE.
o CTA standards vary considerably.
o Ineffective monitoring and interaction with tertiary institutions by SAICA to ensure consistency of standards.
o Lack of mentoring and monitoring of trainee accountants contributes to a high dropout level and poor throughput pass percentages.
• Perceived lack of transparency of the whole examination process (i.e., the setting, marking and adjudication of the QE).
- Training level
In-service training under a formal training contract is the final step towards qualification as a CA(SA), and the desired outcome is a significant increase in the number of Black trainees, and particularly Black female trainees, who enter into and complete their training contracts successfully.
Current situation/challenges
Perceptions of Black trainees
• Side-lining at work or biased quality work allocation, which leads to a lack of self-esteem.
• Inadequate interaction and counselling by partners and managers with Black trainees.
• Some resistance by training offices/officers to the employment of Black trainees.
• That a Black trainee needs to outperform his White counterparts to achieve recognition.
• An inherent and perpetual perception that Black people are inferior and do not show initiative
Perceptions of White trainees
• Equating accelerated development with a discriminatory decrease in White trainees’ promotional prospects
Cultural differences
• Lack of understanding of cultural diversity.
• Lack of understanding of basic business concepts (practices) and processes.
Other
• Firms communicate impressive strategies for transformation in the media, which are not translated into practical changes in the business environment.
• Difficulties with office conditions and work situations by trainees who have little knowledge of or experience with (predominantly White) expectations; in particular, five-year trainees taken straight from school are less likely to have acquired or experienced business skills.
- Employment level
Obviously, entities in the CA sector will only be able to achieve the compliance targets on the different scorecards if the trainee accountants remain within the sector. To this end, the desired future outcome with regard to employment would be that because of satisfaction with working conditions, the Black trainees who qualify as CA(SA)s remain in the profession or in public practice for at least three years after qualification.
Current situation/challenges
Working conditions and opportunities for trainees
• Support and mentorship programmes are generally inadequate.
• Difficulties in reaching off-site audit assignments because trainees cannot afford a vehicle.
• Inadequate study leave is an issue for the many Black part-time trainees.
• A heavy financial burden, with the Black trainee frequently having to support an extended family.
• Insufficient accredited training offices.
• Prospective trainees have little knowledge of small and medium-sized accountancy firms and tax and advisory consultancy professions.
ENTERPRISE AND SUPPLIER DEVELOPMENT
- Preferential procurement
The target for the CA Sector is to increase procurement from level 5 to level 1 contributors, as well as procurement from suppliers that are 50% and 30% owned by Black females.
Current situation/challenges
• Perception that service delivery by the Black organisations is poor.
• Insufficient numbers of providers of the required services.
• The practice of ‘fronting’ in order to attract business.
• Too little is spent to actively and effectively promote growth and job creation.
- Enterprise and supplier development
The aim for enterprise and supplier development in the CA sector is firstly to focus on the development of Black-owned firms. Where the desired outcome would be an increase in the number of candidates who are trained in the smaller Black firms, the number and size of audits that are conducted jointly and an increase in the number of Black-owned firms. The aim is secondly to increase Black-owned entities that provide products and services to the sector and to increase the non-monetary support to small and medium entities as well as aspirant entrepreneurs.
Current situation/challenges
• Hampered by a lack of funding as well as time pressures.
• Lack of skills for expansion among some Black-owned businesses.
• Smaller Black-owned firms experience significant challenges in attracting and retaining talent (both Black and White) on the trainee and qualified professional levels, primarily due to a perceived inadequate client base and resources for training.
• Insufficient medium-sized Black firms, exacerbated by a lack of opportunities for smaller firms that would allow them to grow bigger.
• Rewards do not always pass proportionately to input where alliances are formed.
• Inadequate financial skills to effectively manage businesses.
• Lack of skills, money or knowledge to start a small business.
SOCIO-ECONOMIC DEVELOPMENT
The CA Sector plans to achieve its compliance targets by increasing spending on SED initiatives in health, education, poverty alleviation and community development and increasing support of non-government organisations as well as public institutions.
Current situation/challenges
• Socio-economic investment initiatives mostly focus on own communities and not the more disadvantaged where the need is greatest.
• Poor communication and coordination on initiatives.
• Lack of knowledge on where or how firms could become involved.
• Development projects do not always result in sustainable social development.
• Inadequate financial management capacity in various spheres of government.
